DBB: Right Time, And Right Theme If China Comes Back

seekingalpha06-03

Monty Rakusen I continue to be bullish on commodities broadly, mainly because I believe China’s economy may have bottomed. China is a major consumer of industrial metals, which means you can get ...

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China is a major consumer of industrial metals, which means you can get ...</p>\n\n<a href=\"https://seekingalpha.com/article/4697144-dbb-right-time-and-right-theme-if-china-comes-back\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FDN","symbol_name":"First Trust Dow Jones Internet I","start_time":0,"source_url":"https://seekingalpha.com/article/4697144-dbb-right-time-and-right-theme-if-china-comes-back","article_id":"2440497411","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/180404800/image_180404800.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2440497411","pubTimestamp":1717427675,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Monty Rakusen I continue to be bullish on commodities broadly, mainly because I believe China’s economy may have bottomed. China is a major consumer of industrial metals, which means you can get expos","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"FDN":"First Trust Dow Jones Internet I","DBB":"基础金属ETF-PowerShares","BK4588":"碎股","BK4585":"ETF&股票定投概念","BCIM":"abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF","BK4550":"红杉资本持仓"},"translate_title":"DBB：如果中国回归，正确的时间和正确的主题","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BCIM":1,"DBB":1,"FDN":0.82},"content_text":"Monty Rakusen I continue to be bullish on commodities broadly, mainly because I believe China’s economy may have bottomed. China is a major consumer of industrial metals, which means you can get exposure to China without investing in China through commodities as a byproduct of their economic activity. If you share similar bullishness, then the Invesco DB Base Metals Fund ETF (NYSEARCA:DBB) is worth considering. This is an exchange-traded fund that tracks the DBIQ Optimum Yield Industrial Metals Index Excess Return. That index tracks futures contracts on three of the most valuable industrial metals in the world: aluminum, copper and zinc. The fund was created to give investors exposure to commodity futures at a 0.75% fee. A Closer Look At The DBB Holdings DBB is designed to give investors exposure to the base metals market with a well-diversified portfolio. Copper, Zinc, and Aluminum futures are equal weighted here, providing a nice even mix from an industrial usage standpoint.   invesco.com DBB collateralizes the futures positions with 100 percent US Treasury securities, money market funds and T-Bills. This explains those holdings. It’s worth addressing precisely why each of these holdings are industrial in nature. First, let’s talk about Copper. This industrial metal is a ubiquitous part of everyday life, used for electrical wiring, plumbing, construction, and manufacturing. As for Aluminum, it's used in plenty of things because of its high strength and good electrical conductivity. In the transportation and packaging industries, aluminum remains the most dominating element, for example, which can be seen in the automotive and can industries. Finally, when it comes to zinc, this is an important ingredient for galvanized steel. It is a key element that coats steel rods and iron bars for infrastructure projects and construction work. It is also used to create brass and bronze alloys, so it can be said that the production of both stainless steels and galvanized steels is where there is a lot of zinc metal. The diversification and equal weighting of these three commodities mitigates the risks involved with excessive exposure to a single metal, while allowing investors to remain exposed to the substantial upside across the broader base metals sector, especially if China does re-accelerate economically. Peer Comparison: DBB vs. Other BCIM There aren’t any pure play competitors to DBB, but the abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF (BCIM) is worth comparing against. BCIM is not equal weight, and includes Nickel and Lead in the allocation. When we compare the two funds to each other through a price ratio, we find that DBB has outperformed given the more concentrated exposure here. stockcharts.com Pros and Cons On the plus side, DBB offers exposure to three of the most commonly used base metals, which are used in a wide variety of industries, from infrastructure and construction to manufacturing. Their increasing demand will likely benefit the DBB ETF as the global economy pushes forward, particularly China’s. The downside is that investing in commodity futures is fundamentally speculative and volatile. There are a host of factors other than the global economy that can affect the price of base metals, such as supply and demand, geopolitical tensions, or wild currency fluctuations. Not to beat a dead horse here, but the real driver of this is China, which is the largest imported of Copper in the world. Now to be clear, I'm not arguing we resume a super cycle driven by China let we saw in the 2000s. With underinvestment broadly in commodities for the past decade, the point is that any marginal pickup in demand for these commodities relative to supply should result in some nice, outsized gains without a major economic acceleration driving their prices vertically. Conclusion  Overall? I like Invesco DB Base Metals Fund ETF. I think it's a clean and pure play way of investing in the three most industrial commodities available, and the fund does so in a way that is difficult to replicate for most investors, given the futures contract positioning needed for exposure. If you’re bullish on a pickup in global manufacturing activity, and China in particular, this is a good way to play it. It makes a lot more sense here than it did a couple of years ago.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2440497411"}